NEW YORK -- Leaders of Europe's luxury brands say the time may be right to offer premium-badged small cars in the United States.
BMW is considering selling a front-drive car slotted below the 1 series in the U.S. Mercedes may offer its next-generation B class in the United States.
Audi, which launches the A1 subcompact in Europe this year, and Volvo say they're watching the trends and are considering similar vehicles.
The small BMW has been approved for production, although timing is unclear. It will break from the company's rear-drive tradition by sharing a front-drive layout with sister brand Mini.
"We have a couple of challenges in front of us," said Jim O'Donnell, president of BMW of North America. "First, Mini has its own unique platform. Does that make sense going forward? Second, whatever comes from changes in fuel economy and mileage requirements, we think the regulations will encourage manufacturers to downsize by bringing into the marketplace front-wheel drive."
O'Donnell said the final front-drive concept of the new small vehicle is in discussion now. "This could be a new price segment for us, attracting younger buyers in the future," he said.
This summer, Mercedes-Benz will begin leasing about 70 fuel cell-powered B-class cars on the U.S. West Coast. Besides assessing a fuel cell car in real-world conditions, the pilot program will test consumer reaction to a small Mercedes.
The next-generation B class debuts in Europe late next year. It will include new variants, such as a small wagon and coupe, and has been homologated for U.S. sales.
The styling "will be more appealing to a North American buyer," said Ernst Lieb, CEO of Mercedes-Benz USA. "A few years ago, an American consumer wouldn't even look at the car."
Dealers also appear more open to a small car, Lieb said. Several years ago, the company planned to sell the current B class here. But Mercedes pulled the plug because of dealer opposition and exchange rates that would have made the price too high.
Mercedes is bringing key dealers to Stuttgart this month to show them the new B class. Later, it will invite U.S. consumers to test the car. Lieb said the key to approving U.S. sales of the the B class is pricing -- and that will hinge largely on exchange rates.
Volvo, meantime, is considering a U.S. vehicle that would be smaller than the compact S60 sedan that goes on sale this fall. In Europe it offers the C30 entry-premium car.
"There is a new focus on fuel efficiency and CO2 emissions that will affect weight and size," said Doug Speck, CEO of Volvo Cars of North America. "We assume consumer demand will go there, legislative demand will go there, and you need that smaller vehicle in the range."
Last year Audi decided not to bring the A1 to the United States. "Americans still equate small size with a small price," said Audi of America President Johan de Nysschen.
But Audi could bring the slightly larger A2 to America if a new generation of the vehicle is approved for production. The first-generation A2 was a flop. Audi stopped making it in 2005.
Said de Nysschen: "We anticipate that with the regulatory environment, downsizing may become an issue."